Answer:
The correct answer is 8.23%.
Explanation:
According to the scenario, the computation can be done as:
WACC of debt = Respective costs of debt× Respective weight of debt
= (0.4 × 5)
= 2
WACC of preferred = Respective costs of preferred × Respective weight of preferred
= (0.15 × 7)
= 1.05
WACC of common equity = Respective costs of common equity × Respective weight of retained earning
= (0.45 × 11.5)
= 5.175
So, Total WACC = WACC of debt + WACC of preferred + WACC of common equity
= 2 + 1.05 + 5.175
= 8.225 or 8.23 (approx.)
Answer:
COFFEE SHOPS would have a larger potential customer base.
NEW SHOE STORE is geared toward individuals with more disposable income.
Explanation:
The logic here is quite simple, households earning $25,000 or more are likely to be customers of the coffee shops. This also includes households earning $55,000 or more. So the consumer base of coffee shops is very large.
On the other hand, only households earning $55,000 or more are likely to be customers of the new shoe store. Since there are fewer households that earn $55,000 or more, their consumer base will be smaller and it should rather focus on people with more disposable income.
Even if 90% of the people earn above $55,000 and only 10% earn between $25,000 - $55,000, the consumer base of coffee shops will always be larger since it includes almost everyone.
Amor, a successful brand of women's clothing, recently introduced a line of fitness equipment. This is an example of diversification. Diversification describes the processes of having diverse product offerings. When you diversify, you are differentiating your products to meet more needs for consumers. Since the brand of clothing recently introducted a line of fitness equipment, they are diverisfying themselves by branching out into other markets.
Answer:
Oriole should buy the wickets.
Explanation:
The variable cost of producing wickets is $22/unit.
The fixed cost of production is $8/unit.
The total cost of producing wickets is $30/unit.
Saran company offers to sell 4900 units of wickets at $24.
If wickets are purchased it will cost $24/unit.
Since cost is lower when buying, Oriole should buy wickets.
To solve:
If we assume there are 30 days in the month then the policy was held by the original owner from November 1st – May 15th which is 195 days. Assuming there are 30 days in the month there are 360 days in the year and that is equal to 1,080 for the insurance policy. If we divide the price of the policy, $1,164 by the amount of days the policy will be held for 1,080 then the policy is worth $1.08 a day. Next, take the amount of days the original owner held the policy and multiply it by the amount per day the policy costs (195)($1.08) = $210.60 Then, we need to subtract $210.60 from the full cost of the policy ($1,164 - $210.60) = $953.40 The buyer should pay the seller $953.40 at closing.
